Imagine your newly bought car bumps into an accident. This could be the worst nightmare, and you have a massive loan for a vehicle. Or, say your car is damaged to the extent that the repair price surpasses your car’s value. In such a case, you can save yourself with GAP insurance. This article will talk about the how, where, and what of GAP insurance.
GAP insurance helps cover the difference between your car’s worth and what you still owe on your loan if your vehicle is totaled in an accident. GAP insurance claims are how insured drivers pay the difference between their car’s loan or lease balance and its actual cash value (ACV) after a total loss. To file a GAP insurance claim, contact your insurer and provide documentation related to your car’s value and coverage details. Depending on the insurance company, you can file a GAP insurance claim in person, over the phone, or online.
Let’s understand GAP insurance with a simple example: you get into an accident, and your car is toast. Your insurance company looks at your whip and says, “Okay, we’ll give you $5,000 for this beat-up ride.” But you still owe the bank $8,000 because you just bought the car. That’s a $3,000 gap. This insurance policy comes in and pays off this GAP amount. GAP insurance covers the financial gap between your car’s depreciated value and any remaining loan balance if it’s totaled. Although it is optional, it is always recommended to save you.
What is the Cost of GAP insurance?
When you have decided to file for GAP insurance, you would be interested in knowing the money you would need to shell out for the premium. Whether you are clubbing it within your regular car insurance or getting it independently depends.
When adding it to your regular car insurance policy, GAP insurance typically costs around $3. If the coverage is bought directly from a car dealer, the price of GAP insurance then ranges from $400 to $700.
The cost of gap insurance often varies based on factors such as the car’s value and the diver’s risk characteristics, including age and claims history. Also, check out Beem to get personalized car insurance quotes from industry leading insurance providers and avail upto 40% off on your coverage.
Where You Might Need to File a Gap Insurance Claim?
Next is the filing process; therefore, knowing where and how to file it is essential. Filing a claim is simple and easy and always a call away.
GAP insurance filing gives you multiple options for where to file it. It could be done over a phone call, in-person meeting, or online. After filing this GAP insurance, if your car even gets into an accident or gets stolen, GAP insurance helps us if the regular car insurance policy is approved. GAP insurance pays the money you still owe on your car loan to the lienholder.
To get a thorough guide on this topic, you can always contact your car insurance policy company or the gap insurance people who manage your gap policy. You can also keep info on how the gap insurance claim is going until it’s sorted out after filing your regular car insurance claim.
How Do You File a Gap Insurance Claim?
Your gap insurer will pay your lienholder the amount due under your gap insurance policy if your car is totaled or stolen and your regular car insurance is approved. You can always contact your car insurance company or gap insurance provider if you have any questions or are trying to figure out what to do. They are here to assist. You can follow the progress of your gap insurance claims process once you file your car insurance claim.
What Documents Do I Need to File a Gap Insurance Claim?
The most important factor is having all your documents correctly. Here is a list of all the documents that you would require to have in place while filing your claim.
Insurance settlement statement: This report details the value of your vehicle and gives you the amount your standard insurance pays you for any damage.
Settlement check copy: The copy of the check sent to the people who gave you the loan or lease is called the settlement check copy. It shows how much they’re getting from the regular insurance.
Loan or Lease Contract: This contract is the original paper discussing your loan or lease. It’s like the money agreement with the folks who lent you the cash.
Loan History: The insurer would interested in knowing your loan history. So you should be able to show them the complete story of all the cash moves – what you paid, when, and how much is left. This paper should include what’s still owed.
Police Report: The first step you should take after you get into an accident is to call the cops and get the official paper from the police that explains what went down – especially if it’s a big problem like a theft or an accident.
Sales Agreement: Dig out the original sales paper from the dealer. It says how much you paid for the car in the beginning; hence, your sales agreement is that one piece of paper that shows the value of your vehicle at the time of purchase.
Check from the Insurance Company: If your car is wrecked, this is the money check from your regular insurance. This check will decide on the gap amount you qualify for.
Insurance Settlement Statement: Another paper from your regular insurance company. It’s like a detailed breakdown of all the money they give you on the check.
Valuation Report: Get a document from your regular insurance showing the beans how much they think your car is worth; this valuation is fundamental to deciding whether you qualify for a GAP insurance claim.
How to Find Your Insurance Policy Documents
Now that we have figured out what documents you will need to file a claim, let us see how we can find these documents.
Here is a quick resource list showing you how to get all the required documents.
Your GAP contract: This is like the rulebook for your gap insurance. You can get it from the people who gave you the gap insurance.
Sales agreement: The paper from the dealer where you got your car. It shows how much you paid for it originally.
Vehicle’s original value: Another paper from the dealer that tells you how much your car was worth when you first got it.
Financing contract: The paper that talks about your loan or lease. You can find it from the people who gave you the loan or lease, like the dealership, bank, or credit union.
Payment history: A list showing all the money stuff – what you paid and when. You can get this from the place that gave you the loan or lease.
Valuation report: A document from your regular insurance company that tells you how much your car is worth.
Check from the insurance company: When your car is a total loss, this is the money check you get from your regular insurance company.
Insurance settlement statement: Another paper from your regular insurance company. It breaks down all the money stuff on the check they give you.
Police report: If a big problem is an accident, you can get this paper from the local authorities.
This is a generic guideline, but you should remember that every insurer has slightly different instructions for filing a gap claim. So, it’s crucial to check their website or contact them directly to verify that you have everything you need. Also, ensure your gap insurance provider has your current contact information.
If your claim is accepted, most gap insurers will send a check, usually directly to the auto lease or loan provider, within four to six weeks. However, you can speed up the process by keeping an eye on any requests for extra paperwork and by reaching out to your insurer with any questions or to check the status of your claim.
When Does Gap Insurance Not Pay?
Although GAP insurance can be very beneficial, there are certain exceptional cases where your GAP insurance doesn’t pay.
When you meet with an accident, and your insurance payout is insufficient to cover what you still owe on your loan or lease, gap insurance fills that financial gap. It is crucial to know that insurance will not cover all the expenses of an accident. Be it for the injuries, fixing your car, getting yourself a new car, or even the damages to someone else’s car. Gap insurance also won’t pay for those past leftover debts from a previous loan or any extra services contracts.
It’s also important to know and understand that gap insurance only helps when you owe more than what your car is valued at. If you don’t find yourself in this specific money situation, gap insurance won’t come into play. Gap insurance is like a money helper for a particular problem – when you owe more than your car is worth.
Calculating a GAP insurance Refund
The cost of your gap insurance premium and how much is left on your current policy define the amount you can be refunded. In this example, let us say your annual premium is $60. Divided by 12 months, that would equate to about $5 per month. That would come to $40 if you received a refund for the eight months you did not use. Suppose you paid for a gap insurance policy starting in early January and want to cancel in late April. In that case, you will qualify for a refund equivalent to eight months of unused coverage.
Some Critical Information About Gap Insurance
- Additional interest, like late fees or extensions, isn’t covered by GAP. If the driver of the car involved in the accident was under the influence, GAP usually won’t pay out.
- GAP only sometimes clears the insurance gap. It typically pays if the remaining balance is more than $1,000 and up to 125% of the car’s value, depending on the policy you have.
- You need to file and finish your GAP claim within a specific time from when your car was declared a total loss. If you don’t do it on time, the claim will expire, and GAP might not pay.
- It can take a few weeks to wrap up a Total Loss Claim. Until it’s all paid off, you’re still responsible for any payments due during this time. Remember that the loan history will still appear on your credit report.
Is it necessary to make loan and lease payments after filing a claim?
Yes, you must continue to make loan and lease payments after filing a claim. Just because you cannot drive your car, your loan or lease agreement does not simply end. The lender may report the default to the credit bureaus if you default on your payments while awaiting the settlement of your gap insurance claim. This can harm your credit. Continue to make your loan or lease payments until you receive your settlement check, which can be used to settle your outstanding balance.
Conclusion
To wrap it up, filing a GAP insurance and dealing with its pros and cons is challenging, but it is there to help you when your car is in big trouble. If you have any queries or doubts, your insurance provider is the right person to contact. From getting the proper documents and filing for a claim to figuring out when exactly the GAP insurance works, all of these questions are ideally answered by your insurance company and even the people handling your insurance. Just reach out to them, ask your queries, keep track of what’s happening with your insurance, and that’s it. These people are here to help you and guide you through it all. Unlock up to 40% off on your car insurance coverage with Beem.
FAQs
How long does it take for a gap insurance to pay?
Filing a gap insurance claim might take a few weeks to complete, but the exact duration varies based on the details of the accident or theft that caused you to file the claim. Initially, your regular car insurance company needs time to determine how much your vehicle was worth during the incident. They do this by determining its actual cash value. Once that’s settled, your gap insurance provider steps in.
How does gap insurance work after a car is totaled?
GAP insurance covers the difference between the totaled car’s owner’s debt on the car loan or lease and the amount the insurance company pays the lender. But before the gap insurance helps and gives any money, the driver must file a claim and ensure everything checks out.
Can I get a gap insurance refund?
The refund amount depends on the cost of your gap insurance premium and the specific terms of your policy. Gap insurance refunds are typically processed within 30 days, but the exact timeline can vary based on the company and state rules. To request a gap insurance refund, contact your lender or dealer and complete any necessary paperwork.
